The continuing low interest rate environment has been a dampener for the Finance sector. The Federal Reserve cut interest rate by 25 basis points twice in the third quarter of 2019.
Finance sector players like banks, insurance companies, brokerage firms and money managers generally benefit from higher interest rates. Banks gain from a higher spread between interest earned and interest paid, the difference of which is called net interest margin. Insurance companies gain from higher interest earned on their investment portfolios.
Year-over-year comparisons are likely to be tough as last year earnings growth was boosted by the tax cut legislation. Also, moderate U.S. economic growth and notable slowdown in major global economic regions are likely to have been other dampeners.
Our latest Earnings Outlook reveals Q3 results from 46.7% of the sector’s market cap on the S&P 500 Index. Total earnings or aggregate net income for these Finance sector companies are down 1.6% from the same period last year on 3.2% higher revenues, with 85.2% beating EPS estimates and 70.4% beating revenue estimates.
For the remaining companies within the Finance sector, earnings are expected to grow 5% on revenue increase of 7.4%.
Let’s take a look at four finance stocks that are scheduled to announce third-quarter results tomorrow.
According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Nasdaq, Inc. (NASDAQ:NDAQ) is likely to have gained from expansion of index and analytics businesses, growth in exchange data products across U.S. and Nordic equities, solid options and fixed income businesses.
Non-trading revenues are likely to have benefited from better performance of Market Technology, Index and Investment Data & Analytics businesses.
Market Technology and Information Services businesses are likely to have contributed significantly to the company’s growth. (Read more: Nasdaq to Report Q3 Earnings: Is a Beat in Store?).
The Zacks Consensus Estimate for earnings per share of $1.21 indicates 5.2% growth from the year-ago quarter reported figure. The company has an Earnings ESP of +0.06% and a Zacks Rank 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company surpassed estimates in three of the last four reported quarters, with the average surprise being 1.92%. This is depicted in the chart below:
Nasdaq, Inc. Price and EPS Surprise
Globe Life, Inc.'s (NYSE:GL) third-quarter earnings are likely to have benefited from superior performance across distribution channels. Increased agent count is expected to have boosted sales.
Continued superior performance at American Income, consistent operations at Global Life and growth at Liberty National are likely to have aided life premiums.
Focus on growth of the supplemental health insurance line of business, with a return-of-premium feature, is likely to have aided margin. ( Read more: Globe Life to Report Q3 Earnings: What's in the Cards?)
The Zacks Consensus Estimate for earnings per share of $1.7 indicates 6.9% increase from the year-ago quarter reported figure. The company has an Earnings ESP of +0.00% and a Zacks Rank 4 (Sell).
The company surpassed estimates in three of the last four reported quarters, with the average surprise being 2.24%. This is depicted in the chart below:
Globe Life Inc. Price and EPS Surprise
Sallie Mae (NASDAQ:SLM) , formally known as SLM Corporation, is a bellwether in education finance in the United States, with market presence for over 40 years. Following the spin-off into two distinct publicly traded entities in April 2014, Sallie Mae started operating independently as a consumer-banking focused company.
The Zacks Consensus Estimate for earnings per share of 25 cents indicates 8.7% increase from the year-ago quarter reported figure. The company has an Earnings ESP of -8.73% and a Zacks Rank 3.
The company surpassed estimates in three of the last four reported quarters, with the average surprise being 7.87%. This is depicted in the chart below:
SLM Corporation Price and EPS Surprise
MarketAxess Holdings Inc. (NASDAQ:MKTX) is a leading multi-dealer trading platform that offers institutional investors access to global liquidity in products like U.S. high-grade corporate bonds, emerging markets and high-yield bonds, European bonds, U.S. agency bonds, credit derivatives and other fixed-income securities.
The Zacks Consensus Estimate for earnings per share of $1.35 indicates 32.4% increase from the year-ago quarter reported figure. The company has an Earnings ESP of 3.65% and a Zacks Rank of 1.
The company surpassed estimates in three of the last four reported quarters, with the average surprise being 3.51%. This is depicted in the chart below:
MarketAxess Holdings Inc. Price and EPS Surprise
7 Best Stocks for the Next 30 Days
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Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.50% per year. So be sure to give these hand-picked 7 your immediate attention.
SLM Corporation (SLM): Free Stock Analysis Report
MarketAxess Holdings Inc. (MKTX): Free Stock Analysis Report
Nasdaq, Inc. (NDAQ): Free Stock Analysis Report
Globe Life Inc. (GL): Free Stock Analysis Report
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